A Guide to the Construction Order Amendments
The Construction Contracts (Northern Ireland) Order 1997 has been amended by the Construction Contracts (Amendment) Act (Northern Ireland) 2011. Due to these changes in the Construction Order the Scheme for Construction Contracts (Northern Ireland) has also been amended.
Quigg Golden have produced a helpful guide that explains the amendments along with a tracked changed document. These can be found by clicking on the link above, or read on below.
The 1997 order has been amended by the Construction Contracts (Amendment) Act (Northern Ireland) 2011 which comes into force on 14 November 2012.
Unfortunately the amendments to the statutory payment rules are not easy to follow. Set out below is a basic guide. As with all legislation, whereas a guide like this can be helpful, there is no substitute to reading the actual legislation in full. They can all be found at www.bailii.org (or try the hyperlinks at end of this document).
The basic premise is that a construction contract will have a provision to give notice of the notified sum, that is the amount due on the payment due date, which shall then be paid by the final date for payment.
The contracts can either specify that the Notice stating the amount due can be given either by:
If the contract does not state who is to issue the notice, the payer is to.
Whoever gives the notice, it must:
The rules then specify what should happen if a payment notice should have been issued by the payer, or a specified person, but was not.
In that case the payee may serve a notice at any time after the payment notice should have been issued by the payer. The notice must comply with the requirements of 9A(3). However, the payee should act quickly as the final date for payment is postponed for same period as between default and 9A(3) notice.
Further, if the contract permits the payee to make an application and he does so then that application will become the 9A(3) Notice and no new one can be given.
The notified sum is to be paid by the Final Date for Payment (10(1))
Payless Notice A payer may serve a payless notice, if he intends to pay less than the notified sum.
A payless notice must be given before the prescribed period before the final date for payment (if the contract does not specify this period the Scheme states it is 7 days). The Notice must specify the sum due (even if £0.00) on the date of the notice and the basis on which it is calculated.
As most payment disputes relate to sub-contracts, let us take a sub-contract which does not contain any payment terms, so the Scheme applies. Let us imagine the work commenced on site on 1 January 2013 and is due to last 6 months.
The first payment due date will be 7 days following 28 days, or on the making of an claim by the payee, whichever is the later.
Let us assume a claim is made on 1st February:
Any paying party must ensure they deal with all claims for payment within the time limits prescribed or face the possibility of having to pay the amount applied for in full.
For further information, please see the following links: